Allowing an overseas-owned company to convert more than 1800 hectares of Northland farmland into forestry will cause long-term damage to the local economy, Federated Farmers provincial president Colin Hannah says.
The Overseas Investment Office (OIO) in November granted Kauri Forestry LP, which is 93% Swiss-owned and 7% German-owned, consent to purchase six Northland beef farms for a combined $25.8 million.
All within an hour’s drive of Whangarei, the six properties amount to just over 1800 hectares.
Most of the land will be planted in predominantly pine, with a rotation time of 25-30 years.
Hannah says he and other farming leaders in Northland are fed up with seeing productive farmland sold into forestry.
“I don’t have a beef at all with the people who are selling the land, because that is absolutely their right, but I think long-term the planting of productive pasture in pines is going to be very detrimental to the people of Northland.
“None of the profit earned by an overseas-owned forestry company will ever be spent in New Zealand, let alone Northland. It’s going to disappear offshore altogether, so it’s not doing the community any good.”
Hannah says converting farmland into forestry removes jobs, and therefore money, from the local economy.
“That land will contribute more as a beef farm than it will as forestry.
“The trees will be planted and then, every six years or so, you’ll need people in there again for maintenance work, but that’s about it. Usually, the people they’ll use for the planting and maintenance aren’t even from the local community anyway.
“Even if they do employ local people, those jobs don’t go on for long. People employed on farms will earn far more than they ever will in forestry.”
Farm-forestry conversion also has major societal impacts, Hannah says.
“The social cost is huge. You’ve got people employed on farms and service industries who lose their jobs, and then what do they do?
“The whole fabric of those communities starts to unravel, unemployment increases, and other issues start to emerge like mental health challenges, crime and social deprivation.”
Another big concern, Hannah says, is that as soon as forestry companies purchase land, they get it revalued at much less than what they paid for it.
“They paid around $25 million but I’ll bet the new valuation, based on it now being forestry land, will be only about half of that amount. They’ll then pay rates on that lower value, and the differential has to be picked up by the community. That’s what these forestry companies do.
“That’s a loophole they can use, and the councils allow it. We’re trying to get that loophole closed because, if they pay $25 million, that’s what they should be paying rates on.”
The other big risk is that in another decade or two, China, our biggest timber market, won’t want any of our product anyway, Hannah says.
“They’re planting so much of their own forestry that they’re becoming self-sufficient, so where are our logs going to go then?
“There may not even be a future market for that wood, so we need to be seriously thinking about whether we should be allowing so much productive and valuable farmland to be sold into trees.”
If the trees don’t end up being harvested, that creates a liability for the province, Hannah says.
“Because if you plant Radiata in the wrong place and then you can’t harvest it, it’ll fall over and then who’s going to clean up the fire risk?”
Hannah is reluctant to tell the Government what to do, but says it seems clearly illogical to sell off our land if it doesn’t benefit New Zealand.
“We really need to take a close look at what the Overseas Investment Office is doing. I see that Kauri Forestry LP is allowed to buy up to 6000ha in up to 20 transactions without any more approval, but what are these overseas companies bringing to New Zealand other than a one-off cash payment?
“Northland’s economy is struggling enough as it is, so is the Overseas Investment Office even taking that into consideration when it makes these decisions? I doubt it.”
Hannah says he’s hoping the new Government, which includes former Federated Farmers Northland vice president turned National MP for Northland Grant McCallum, will make it easier to farm, which in turn might stem the flow of farmland being sold into trees.
Federated Farmers, New Zealand’s leading independent rural advocacy organisation, has established a news and insights partnership with AgriHQ, the country’s leading rural publisher, to give the farmers of New Zealand a more informed, united and stronger voice. Feds news and commentary appears each week in its own section of the Farmers Weekly print edition and online.
